Because Cryptocurrencies gained momentum this 2017, it was inevitable that innovations rooting from this technology will appear sooner or later. And true enough, token sales are among the trendiest things today. Better known as ICO or Initial Coin Offering, it is a way to fund projects by creating a token that can be used within its own system. How exactly does it work?
A company makes a coin that it sells to the public in exchange for a service. It is also possible to trade these coins for other currencies.
2017 Was the Year of ICO
Just how popular did ICOs get this year? ICOs have already made $1.67 billion today. To give you an idea about ICOs rise in popularity this year, $1.36 billion of the entire $1.67 billion was raised in 2017 alone.
This is quite compelling. In fact, it is an idea that works similarly as any other startup. However, it has integrated mainly the use of token sales. And because it is relatively new, let’s admit that there are many detractors to this kind of strategy to raise funds. A good number of people have expressed their concerns regarding this kind of strategy as well. For one, this is an environment that can be prone to scams. And because it is relatively new and unregulated, it is possible that investors are placing their hard earned money on nothing but marketing and even just hype.
Johann Gevers, the founder of Tezos Foundation, have argued that this kind of risk on the part of investors is nothing really new. He mentioned that exact same risk is seen in traditional startups. He said that “Google did not have a revenue model when it started.”
What to Expect This 2018?
So what should we expect on ICOs this 2018? Experts believe that it will become regulated as rules are expected to be implemented in the coming months. For one, you have Securities and Exchange Commissions (SEC) becoming interested in ICOs. SEC is the one responsible for regulating tradable financial assets in the US.
This could be a good thing. Investors can expect that there will be stricter rules and regulations before a token sale is going to be open to the public. This could easily enforce actions against those organizations and individuals who are clearly scamming investors.
In the future, we can expect SEC rules to solidify investors’ confidence. And most likely, this could even start a new trend. In terms of a funding model, ICOs are a great way to fund startup businesses. Though it is still in its early stages, it is definitely expected to stay.
A Bubble Waiting to Burst
As the industry becomes more professionalized, we can expect less new players along the way. And because of this, it could mean that the ICO bubble has burst. But in reality, this can also be viewed as a good thing. Why exactly is this a good thing? This could mean fewer scams that investors could encounter. For ICOs, it means meeting SEC regulations before you can even put a token on sale.